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Government stretches furlough scheme to October

12 May: The Chancellor has extended the government’s Coronavirus Job Retention Scheme until the end of October and announced the introduction of new ‘part-time’ furlough flexibility from August.

Speaking at the Houses of Parliament, Rishi Sunak told MPs that the Coronavirus Job Retention Scheme (CJRS) will continue in its current form until the end of July, and then from August to the end of October the measure will continue for all sectors but with greater flexibility.

Rumours of the government winding down its contribution to the scheme from 80% of workers’ current salaries (up to £2,500) down to 60% proved unfounded. Instead, the government will wind down its contribution through a ‘return to work transition’.

From the start of August, furloughed workers will be able to return to work part-time with employers asked to pay a percentage towards the salaries of their furloughed staff. Sunak also confirmed that part-time working will only be permitted for employers “currently using” the scheme.

More specific details around the implementation of the new phase of the scheme will be made available by the end of May.

ICAEW’s Chief Executive Michael Izza hailed the move as “a bold decision that will sustain many thousands of viable businesses until the prospective arrival of better times. It will help protect millions of jobs which might otherwise be lost, at an incalculable social and economic cost.

“Looking ahead,” continued Izza, “it is sensible that the scheme should incorporate greater flexibility to stay in step with the government’s strategy for a phased national recovery. Allowing companies to bring staff back into full-time working in stages will avoid a dangerous ‘cliff-edge’, but this must not create complexity and an administrative burden on business. ICAEW looks forward to working with HM Treasury and HMRC as they consider how to implement these changes.”

HMRC has also confirmed that it is continuing to work on the CJRS application system. In updated guidance published on 11 May, it confirmed that it is not yet possible to make amendments to applications already submitted, but employers should wait until HMRC has a confirmed process before trying to rectify errors.

In his address, the Chancellor confirmed that 7.5 million jobs had been furloughed, around 29% of the UK’s working population, with 935,000 businesses currently using the scheme and a total of £10.1bn claimed so far via the CJRS.

According to a government statement released after Sunak’s statement, the government will explore ways through which furloughed workers who wish to undertake additional training or learn new skills are supported during this period.